Dutch court decides on recovery of input VAT and the intention of the supplier.
The interested party owns two golf courses. It has issued an invoice with VAT to its full subsidiary in relation to the rental of a golf course. The interested party has not paid the invoiced VAT to the tax authorities. In its turn, the subsidiary has not deducted the VAT occurred.
The Tax Authorities have assessed the invoiced VAT from the interested party. They took the view that it was the intention of the interested party to not pay the VAT due.
The Dutch Supreme Court has ruled that the interested party can be blamed for not paying the VAT. It concluded from statements by the interested party and its representative that, when the VAT should have been paid, the interested party was aware of the fact that – even if the interested party and the subsidiary met the requirements for forming a VAT group – the VAT was due and that it knowingly chose not to pay it. The fact that the subsidiary did not recover the invoiced VAT in its return does not change this.
According to the Supreme Court, for determining the VAT duty it is not relevant whether the entrepreneur to whom VAT has been charged, can recover this VAT. The concerning amount forms the base for imposing the fine insofar as that amount has not been paid as a result of the taxpayer’s intent or gross negligence.
A logical judgement as it relates to the level of ‘intent’ at the level of the interested party. In case parties actually could form a VAT group, the question arises whether the assessment might have been prevented by claiming that the VAT incorrectly charged would be ‘revised’. It seems that this argument was brought into the discussion too late (only before the Supreme Court) and that it fell outside the scope of the discussion at hand.
Source: www.rechtspraak.nl
Author: Joyce Westerveld, VAT Advisor at RED
